Why smart utilities are embracing distributed electricity

Power companies that take initiative now can position themselves for a bright future in tomorrow’s clean energy economy.

Governments have realised that one of their biggest challenges in cutting the use of fossil fueUtility companies should adopt distributed energy generation that incorporates incorporate renewable energy, storage and software and people to modernise the grid.. Image: Shutterstock

By Gavriella Keyles, Ensia.com

Friday 2 September 2016

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The growth of distributed energy generation, particularly in the form of solar energy, leaves the aging, monopolistic electric utility system a daunting choice: Come out swinging in defense of the status quo or boldly jump into the cockpit, put on the co-pilot’s hat and fly toward the clean energy future.

The second choice is not only the best option, it’s a vital move toward curbing climate change, serving customers with fair prices and, most importantly for the folks calling the shots, keeping utility companies in business.

In order to stay competitive, utility companies, grid operators and the people who regulate them need to do what’s right for people and planet — incorporate renewable energy, storage and software to modernise the grid.

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When you own power production facilities then you would typically want to have authority to sell power.

Kit Konolige, analyst, Bloomberg Intelligence

Consumers producing and selling their own power lowers demand for power produced by utilities. This is a growing trend that threatens the very premise of the utility industry.

Change is coming

Change is coming — renewables advocates recognise this and are moving full speed ahead.

Some utility companies and state utility commissions have heeded the call for progress, too. They’re modernising the grid in ways we’ve never seen before, making the U.S. electricity system more resilient and better able to serve the American people with cheap, reliable and clean electricity.

As far as carbon emissions and price stabilisation go, this is undoubtedly the right thing to do. But more importantly for electric sector incumbents, it’s the smart thing to do to avoid being left behind and facing the worst kind of “Kodak moment.”

A few projects demonstrate the potential of innovative collaboration between utilities and distributed energy resources.

Consolidated Edison, New York City’s major utility, recently announced it would be piloting a virtual power plant that incorporates distributed generation into an organised, modern grid, with more than 300 homes leasing high-efficiency solar panels and lithium-ion battery storage systems from Sunverge Energy.

SunPower will supply panels for the project. What’s amazing is that the power produced by these rooftop solar energy systems will be directly integrated with utility control rooms.

Nevada’s utility companies are putting their businesses and their shareholders at risk by not changing with the times. These short-term effects pale in comparison to the threat of stranded assets — investments that become unusable due to policy and market changes — if regulators fail to update infrastructure to accommodate distributed energy.

Nevada’s story is the laggard’s story, though it’s certainly not too late to turn around and pursue collaboration and innovation.

While net metering can be problematic and every state has different regulatory challenges and needs, there is assuredly a better way to approach those challenges that accounts for more distributed renewable energy.

Resisting change leads to economic losses, a bad rap in the media, and inadequate preparation for emerging regulations and market forces related to climate change, aging grid infrastructure and growing public support for renewable technologies.

In or out

The electric sector is at a turning point. The climate crisis is beckoning it to step up and lead the charge into a more sustainable future.

Some companies are heeding the call, and the benefits they will see are many — from safety and resilience to cost reductions and carbon reduction. The companies that turn a deaf ear will face stranded assets, slow job growth and a loss of consumer trust.

Utilities must ask themselves: Will we secure our place in a low-carbon economy, or will we be left out of it?